Magazine article American Banker

Wells Fargo Blazes a Trail with LifePath Funds

Magazine article American Banker

Wells Fargo Blazes a Trail with LifePath Funds

Article excerpt

Who says banks are nothing but copycats when it comes to mutual funds?

One of the most-lauded mutual fund innovations of 1994 came not from a traditional fund company, but from Wells Fargo & Co., San Francisco.

The LifePath Funds, which the $52 billion-asset banking company unveiled in March, are designed to keep pace with consumers' financial needs over periods as long as five decades.

Put simply, the funds are a new twist on asset-allocation products. Customers are matched with any of six portfolios, depending on their risk tolerance and how soon they expect to need the money.

The mix of stocks, bonds, and money market instruments in each portfolio grows less volatile as investors near retirement age.

"I don't know of another product like this," said Joy Montgomery, president of Money Marketing Initiatives, Morristown, N.J. "They're meeting customers' needs in a simple way."

Wells Fargo designed the funds to offer consumers a simple way for investors to tackle the often-daunting challenge of retirement planning, said Donald Luskin, a managing director with Wells Fargo Nikko Investment Advisors.

"It's not easy to figure out how to be an expert investor," said Mr. Luskin, who oversees the unit's defined contribution plan group. "Our products are designed to help remove guesswork."

The investment advisory unit, which manages the funds, is a partnership between Wells Fargo and Nikko Securities Co.

WFNIA, as the unit is known, pioneered index-fund investment strategies and now manages more than 100 of these offerings, including the LifePath Funds.

In just six months, the LifePath Funds have attracted $170 million in retail sales through Wells Fargo branches, Mr. Luskin said.

Corporate customers are flocking to the funds, too, he added. Twelve companies have made the LifePath Funds part of their 401(k) plans for employees, and another dozen or so are close to signing on.

"We're very happy with the progress," Mr. Luskin said. "This is a brand new idea with no track record, and it's been a very tough year in a down market."

The LifePath Funds are only the newest orb in a galaxy of investment products managed by Wells Fargo and its affiliates.

The company's mutual fund assets under management totaled $8.2 billion at midyear, according to Lipper Analytical Services, Summit, N.J.

Wells Fargo's product lines include the Stagecoach Funds for retail investors and the Overland Express Funds for institutional investors. While these proprietary funds account for the lion's share of Wells Fargo's fund sales, the bank also offers its retail customers mutual funds managed by Franklin Resources, San Mateo, Calif.

Structured retirement plans, like corporatesponsored 401(k) programs, represent a customer group that Wells Fargo very much wants to reach. …

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